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The Natural Capital Framework
Presentation to the Seminar‘Environmental Economics and Natural Capital’
In the series ‘Sustaining Future Ecosystem Services – From Understanding to
Action’
By
Professor Paul EkinsProfessor of Energy and Environment Policy, King’s College London
National Liberal Club, London
Wednesday 16th April 2008
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CRITINC Project
• DG Research Framework 5 • Making Sustainability Operational: Critical
Natural Capital And The Implications Of A Strong Sustainability Criterion (CRITINC)
• Ekins, P., Simon, S., Deutsch, L., Folke, C. & de Groot, R. 2003 ‘A Framework for the Practical Application of the Concepts of Critical Natural Capital and Strong Sustainability’ in Special Section of Ecological Economics, edited by Paul Ekins, Carl Folke & Rudolf de Groot, Vol.44 No.2-3, pp.165-185
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SRDTOOLS Project• DG Research Framework 6 • Methods and tools for evaluating the impact of cohesion
policies on sustainable regional development (SRDTOOLS)
• Arose out of DG REGIO evaluation of contribution of structural funds to sustainable development (SD) which– Used 4-capitals model of SD, which– Enabled identification of UNsustainable development– Structured dialogue in recognisably economic language – Identified trade-offs between different dimensions of SD
BUT did not identify how decisions should be made about trade-offs
• Ekins, P., Dresner, S. & Dahlström, K. 2008 (forthcoming) ‘The 4-Capitals Method of Sustainable Development Evaluation’ in European Environment, Special Issue on Sustainable Development Evaluation, edited by Paul Ekins and Simon Dresner
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The Concept of Capital and 4-Capital Framework
• Capital stocks (assets) provide a flow of goods and services which contribute to human well-being. The stock value is the net present value of the flow
• Four types of capital recognised: – Manufactured Capital: produced assets used to produce
other goods and services, e.g. buildings, transport infrastructure, machines
– Natural Capital: traditional natural resources (timber, water, minerals) and other natural assets such as biodiversity, climate, ecosystems
– Human Capital: health, wellbeing and productive potential of individuals
– Social Capital: social networks that support efficient and cohesive societies, e.g. social trust, norms, political and legal structures
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Capital and Sustainability• Places Environment in recognisable economic
framework on an equal basis with other factors of production (cf ‘externality’ concept)
• Capital and sustainability: in the provision of goods and services, capital depreciates; for sustainability it must be replenished (investment)
• Economic, social, environmental sustainability• Weak and strong sustainability (substitutability
between capitals)• Potential for unsustainable development lies in loss of
one or more capital stocks, or in trade-offs made between different forms of capital, and extent to which– Any decline represents a breach of some critical threshold (breach of
which threatens system integrity), and if not, whether– Any decline in one form is compensated by increases in other forms
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Natural Capital• Characteristics, Values and Functions of
Nature – Characteristics: air, water, land, habitats – Values: ecological (conservation, existence), social
(human health, personal, community, option), economic (production, consumption, employment)
– Functions: Natural capital can only be inferred from the
performance of environmental functions Environmental function: “the capacity of natural
processes and components to provide goods and services that satisfy human needs (directly and/or indirectly)” (de Groot 1992, p.7).
de Groot: Regulation, Habitat, Production, Information CRITINC: Life support, source of resources, sink for
wastes, maintenance of human health, other contributions to human welfare (e.g. amenity)
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Environmental sustainability
• Sustainability: capacity for continuance
• Environmental sustainability: maintenance of important environmental functions
• Importance:– Not substitutable, irreversible loss,
‘immoderate’ losses– Maintenance of health, evidence of threat,
economic sustainability
Environmental sustainability:maintaining important environmental
functions
Biosphere
Functions of Nature
• Life Support
• Source
• Sink
Functions for Humans
• Economy
• Human health
• Human welfare
+ -
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Critical Threshold Analysis• Environmental Sustainability: possible to articulate principles
(e.g. sustainable use of environmental functions) based on scientific evidence and derive environmental thresholds and standards.
• Identification of – Critical thresholds (change of state) – Critical trends (may refer to state or pressure) – Policy targets
• Analytic questions – What critical thresholds are currently being breached? – What critical trends threaten to breach critical thresholds in the
future (traffic lights representation)? – What policy targets have been adopted in relation to these critical
thresholds and what is their relation to them?– What policies have been implemented or proposed to meet the
policy targets? – Do these policies seem adequate, either to achieve the policy
targets or to address the criticality or both?– What is the relationship between these issues of criticality and
issues of quality of life?
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Criteria for Environmental Sustainability (1)
• Non-substitutable, irreversible, immoderate cost (Ciracy-Wantrup); Safe minimum standard (Bishop)
• Maintenance of biodiversity • Renewal of renewable resources • Daly
– Limit the human scale (throughput) to the earth’s carrying capacity.
– Efficiency (not throughput) increasing technological progress
– Renewable resource harvest less than regeneration rate; waste emissions less than assimilative capacities
– Non-renewable resource exploitation rate less than the rate of creation of renewable substitutes.
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Criteria for Environmental Sustainability (2)
• Prevention of destabilisation of global environmental features such as climate patterns or the ozone layer
• Maintenance of biodiversity • Renewal of renewable resources • Maintenance of a minimum life-expectancy of non-
renewable resources • Ensuring that emissions into air, soil and water do not
exceed their critical load for ecosystems nor lead to adverse effects on human health
• Conservation of landscapes of special human or ecological significance
• Avoidance of risk of potentially catastrophic events
Functions and Sustainability Principles
TYPE OF FUNCTION SUSTAINABILITY PRINCIPLE(related to an environmental theme)
Sink 1. Prevent global warming, ozone depletion5. Respect critical loads for ecosystems
Source 3. Renew renewable resources4. Use non-renewables prudently
Life Support 2. Maintain biodiversity (especially species & ecosystems)7. Apply the Precautionary Principle
Human Health and Welfare
5. Respect standards for human health6. Conserve landscape/amenity
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Measurement: Indicators and CRITINC Framework
• Indicators– Frameworks, e.g Quality of Life Counts, 15 Headline, 139
supporting indicators, economic, social, environmental– National wealth, weak sustainability, World Bank
Genuine Savings (rich countries are sustainable)– ‘Top 60’ indicators in ten policy fields
• Sustainability Gaps– Physical standard, physical SGAP, monetary SGAP
(MSGAP) (MSGAP/GDP - unsustainability intensity)– Years-to-Sustainability
• CRITINC framework: SGAP plus economic and social indicators
Sustainability Gap Calculations
Environ-mental stress
(ES)
Sustain-ability
standard (SS)
Sustain-ability Gap (SGAP)
(ES-SS)
Normalised SGAP (100*SGAP/SS), EPeq
Years to sustain-ability
1980 1991 1980 1991 1980 1991 Climate change, Ceq
286 239 10 276 229 2760 100
2290 83
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Ozone depletion, Oeq
20000 8721 0 20000 8721 na na 8.5
Acidification, Aeq
6700 4100 400 6300 3700 1575 100
925 59
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Eutrophication, Eeq
302 273 86 216 187 251 100
217 86
71
Dispersion, Deq 251 222 12 239 210 1992 100
1750 88
80
Waste disposal, Weq
15.3 14.1 3 12.3 11.1 410 100
370 90
102
Disturbance, Neq
46 57 9 37 48 411 100
533 130
never
TOTAL na na na na na 7399 100
6085 82
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Various Sustainability Measures for the Netherlands
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The CRITINC Methodology• Identification of the function(s) under threat or investigation,
and their placement in the relevant category (source, sink, life-support or human health and welfare).
• Relation of the functions back to the natural capital from which they emanate.
• Preparation of the various environmental impact matrices.• Derivation of sustainability standards for the functions, if
possible, or trends in those cases where sustainability standards cannot be identified.
• Where standards have been identified, calculation of the SGAPs in relation to them.
• Description of the economic or social aspiration that is putting the function under threat or pressure, in terms of the benefit that its realisation would yield. Investigation of alternative ways of partially or wholly achieving the aspiration.
• Application of a system of decision-analysis, such as multi-criteria analysis, to give insights into the implications of closing the SGAPs
SRDTOOLS: A nested approach to assessing sustainable development
Social
Impacts
Deliberation
Weighting
Weighted
MCA
CBA
Monetised
Indicators
Choosing assessment methods:
Taking account of complexitysocial
Rationality
individualsimple The good complexcertainty/risk uncertaintyindividual items common goods
Human interactions
CBA
MCA
Delib. approaches
